Bridgewater Bancshares, Inc. Annual Report

Bridgewater Bancshares, Inc. and Subsidiaries Notes to Consolidated Financial Statements (dollars in thousands, except share data)

The Company used the S&P 600 CM Bank Index as its historical volatility index. The S&P 600 CM Bank Index is an index of publicly traded small capitalization, regional, commercial banks located throughout the United States. There were 54 banks in the index ranging in market capitalization from $500 million up to $4.5 billion. The weighted average assumptions used in the model for valuing stock option grants in 2019 is as follows:

December 31, 2019

Dividend Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk-Free Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.75 % The following table presents a summary of the status of the Company’s outstanding stock options for the years ended December 31, 2019 and 2018: — % 7 Years 21.93 %

December 31, 2019

December 31, 2018

Weighted Average

Weighted Average

Shares Exercise Price

Shares Exercise Price

Outstanding at Beginning of Year . . . . . . 1,807,100 $ Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . 238,000 Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . (74,850)

6.24 1,721,000 $ 12.47 135,000 3.45 (37,900) 10.65 (11,000) 7.08 1,807,100 $

5.68 12.52 2.78 7.61 6.24

Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . .

(8,600)

Outstanding at End of Year . . . . . . . . . . . 1,961,650 $

Options Exercisable at End of Year. . . . . 992,050 $

5.01 721,100 $

4.19

For the years ended December 31, 2019, 2018 and 2017, the Company recognized compensation expense for stock options of $721, $799 and $368, respectively. The following table presents information pertaining to options outstanding at December 31, 2019:

Options Outstanding

Options Exercisable

Number

Remaining

Number

Exercise Price

Outstanding Contractual Life

Exercise Price Outstanding

$

2.13 3.00 3.58 7.47

74,750 455,000 45,000 1,023,900

3.3 Years $

2.13 74,750 3.00 455,000 3.58 35,000 7.47 402,300 13.22 5,000 12.86 9,000 12.94 6,000 11.59 5,000

4.0 Years 5.0 Years 7.8 Years 8.4 Years 8.7 Years 8.8 Years 8.8 Years 9.2 Years 9.7 Years 9.9 Years

13.22 12.86 12.94 11.59 11.15 11.13 12.92

25,000 45,000 30,000 25,000 10,000 50,000 178,000

11.15 11.13 12.92

— — —

Totals

1,961,650

7.0 Years $

7.08 992,050

113